Signs of Recovery in Manufacturing are Getting Visible

The CII ASCON Survey for the July-September 2014 quarter was released at the CII Associations Council Meeting in New Delhi on 5th December 2014. The Survey indicated that the economic growth has picked up with more number of sectors showing positive growth trends in the July-September quarter 2014 as compared to July-September 2013. Although the expected growth resurgence is still elusive, industry feels that with government’s focused efforts to bolster investments in manufacturing, the growth is inevitable.

The CII ASCON Survey, which tracks the growth of industrial sector on a quarterly basis, based on feedback received from sectoral industry associations, shows that out of 59 sectors surveyed, the number of sectors reporting ‘excellent’ and high growth (>10 %) has shown an increase from 26.08% in 2013 to 30.4% in July-September 2014. At the same time, number of sectors registering ‘low’ and ‘negative’ growth for July- September 2014 quarter has marginally gone down from 73.90% in 2013 to 69.48% in July-September 2014.

The Survey categorises the growth range in four broad categories, namely excellent (>20%), good (10-20%), low (0-10%), and negative (less than 0%).

“There is an optimistic sentiment within the industry, with a strong confidence in new initiatives. The results of the ASCON Survey for this quarter are encouraging. 30.4% sectors have grown in the range of 10% and above mark. Though the industry still feels that the complete rebound of manufacturing will take time, the government’s focus on Ease of Doing Business, Good Governance, Investments specifically inbound new investments will be the key areas eventually leading India towards becoming a strong manufacturing base,” said Mr Chandrajit Banerjee, Director General, CII.

The disaggregated analysis of the Survey reveals that most of the high and excellent growth has been registered by segments of white goods, synthetic fiber, consumer non-durables such as imported oils, groundnut oil, rape seeds, along with machine tools and rubber machinery, etc.

The vehicle industry has witnessed a low to negative growth in most of the segments such as passenger cars, commercial vehicles, utility vehicle, tyres, etc. However, two wheelers and three wheelers have registered excellent growth.

Segments of White Goods industry such as refrigerators, air conditioners, small appliances have registered about 12%-15% high growth rate. The LCD/LED segment has been witnessing a boost and growth has been exceptional pegging above 20% mark. The rural purchase trends and sales in tier 4 & 5 cities have contributed significantly to this growth.

The Basic goods sector, this time again, has registered low growth with major segments like steel, fertilizer, paints, pig iron, and cement registering growth between 0-6 percent on an average.

The intermediate goods sector after a prolonged period has shown positive growth trends. Segments such as power cables, circuit breakers, have grown between 10-20%. Other segments such as motors, ball and roller bearings, capacitors continue to record a low growth.

Later interacting with CII affiliated sector associations, Amitabh Kant, Secretary, Department of Industrial Policy and Promotion, Government of India stated that for economy to grow at 9-10%, manufacturing has to grow at 14-15% every year. Countries such as Japan, Korea, China have emerged as leading global economies only by building a strong manufacturing base. India, too has to create a strong manufacturing environment to come out of the present economic shackle.

On the issue of inverted duty structure raised by many industry associations, while assuring DIPP support, he appealed industry associations to come out with a detailed analysis with strong facts and figures.

Earlier, Dr. Rajan Katoch, Secretary, Ministry of Heavy Industries, Government of India stated that the Department of Heavy Industries has formulated a scheme for enhancement of competitiveness of the capital goods sector. Under the scheme an outlay of Rs. 930 crore has been sanctioned. The scheme, on its implementation, would attempt to make the Indian capital goods sector globally competitive. The sub sectors of Capital Goods covered under the scheme are mainly for Machine Tools, Textile Machinery, Construction and Mining Machinery, and Process Plant Machinery. The proposed scheme addresses the issue of technological depth creation in the capital goods sector, besides creating common industrial facility centres.

During the interaction, the representatives of the sectoral associations shared their views on making their respective sectors globally competitive, attract investments, develop technological and R&D capabilities and exploit opportunity and image created by the the “Make in India Campaign”. The associations also shared their concerns regarding the inverted duty structures, FTAs, highly graded tax structures, etc.

SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.